India Scraps Pulses Import Tax to Cool Prices Amid Election

(Bloomberg) -- India, the world’s biggest consumer of pulses, removed import duties on some varieties in a fresh bid to curb food inflation with national elections in full swing.

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The government scrapped the levy on chickpeas and extended tax-free imports of yellow peas, according to a notification by the finance ministry late Friday, just days ahead of the third phase of polling on Tuesday. Pulses are an important part of the Indian cuisine and the main source of protein for millions in the world’s most populous nation.

The move is likely to shield Indian consumers from rising prices, but could discourage local farmers to boost plantings of the crops.

Still, the decision may benefit drought-hit farmers in Australia — a leading exporter of the commodity — where sowing is underway. Some farmers there are planting chickpeas instead of wheat due to ongoing dry conditions and in anticipation of higher demand from India, said Ole Houe, chief executive officer at broker IKON Commodities. Although the impact on the country’s wheat output is likely to be marginal, chickpeas plantings could even double from last year, he said.

India imports pulses from several countries, including Canada and Myanmar. The legumes, which include pigeon peas, chickpeas and lentils, are often cooked with curry spices, sauces or butter and eaten at most meals with rice and Indian flat bread.

“Though it’s good for consumers, the zero-duty import policy is going to affect our farmers as cheap supplies from overseas will put pressure on domestic prices,” said Bimal Kothari, chairman of India Pulses and Grains Association. The group will send a delegation to the government and ask to reverse the decision, he said.

The retail price of chickpeas was more than 20% higher than a year earlier in New Delhi on Sunday, according to data from the food ministry.

Separately, the government lifted a ban on onion exports and imposed a duty of 40% on overseas shipments of the commodity, according to the finance ministry.

(Updates to add comment in sixth paragraph.)

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